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Consumers have proven it. We need a gasoline tax.

Posted by: David Welch on January 28, 2009

You heard a lot of hubbub after December sales results about how Americans went trooping back to big trucks because gasoline prices stayed below $2 a gallon for the third straight month. They did, sort of. The numbers showed that trucks accounted for 55% of all vehicle sales last month. Americans had been shifting back to passenger cars for most of the year as a result of fuel prices that soared over $4 a gallon in July. But it wasn’t a return to the really big gas hogs that made the flip-flop among car sales.

If you dig into the numbers, what really happened was a bit of a return to rational car buying. Sure, some buyers did go and get deeply-discounted Chevy Tahoes because gasoline was cheap. But the only part of the truck market that fared better than the overall vehicle market—which was down a rude 35%—was sales of crossover suvs. That makes sense. It would be great if everyone chose a compact that gets 35 miles per gallon. But most people need at least one car in the garage that hauls more people. For a family buyer, the most rational purchase is a crossover that fits five or seven people and gets mileage in the mid-20s.

The people who make a purchase that they will have to live with for six years based on this month’s gasoline prices are pretty silly. Someone who tries to shoehorn their family of five into a Toyota Prius when gas price top $4 may be as irrational as the person who buys a Chevrolet Suburban when pump prices sink as they have. The vehicle that lets you cart your crew in comfort without pain at the pump is a crossover. And there are 26 of them coming to market this year. The Kia Borrego is brand new, and it’s a pretty nice suv. Chevy has a new Equinox coming in a few months. It could be a big winner for GM. Those vehicles both come at the right time.

Of course, this isn’t good for reducing our use of oil. Nor does it support the green cause. While those crossover suvs are thriftier than, say, a Ford Expedition, they won’t really reduce our oil imports. And they come nowhere near meeting the fuel economy rules that California and the Federal Government are pushing for 2016. And hybrids? Now that cheap gasoline has exposed hybrids as a car for those who, as AutoNation CEO Mike Jackson said recently, “have a need to make an environmental statement and a desire to express it.” Until the math makes better sense, hybrids will be less than 5% of the market, Jackson says. Bottom line: Americans need a reason to go small or green. And only a gasoline tax will do it.

Reader Comments

Peter Gray

January 29, 2009 2:25 PM

Perhaps now is the time to remind American auto makers that they have European subsidiaries who have been achieving 2011 fuel economy levels for years, including vehicles which comfortably carry 5-7 people. The idea that they need $25bn to achieve less than shameful consumption figures is laughable - they could import a 1986 Citoen BX turbodiesel estate and see how to get 45 (US) mpg for around $500.
No sign of corporate learning there, then?

You for real?

January 30, 2009 7:48 PM

This is another example of Jackson putting his political bias over the health of his company and the thousands of people he employs, anyone who thinks that raising the cost of gas would increase vehicle sales is either out of touch with reality or just plain stupid, just look back 90 days at the devastating effects $4.00 gas had on auto sales. The fact that people and manufacturers would pay more attention to fuel efficient technology does not justify trashing your life blood... AUTO SALES "what an idiot!" also I've got news for you Mike WE ARE ALREADY FOCUSING ON FULE EFFICENTY AND ALTERNATIVE SOURCES OF ENERGY FOR TRANSPORTATION... LOOK AROUND. We do not need more taxes to inflate the cost of fuel, oh and speaking of fuel when you impose your taxes on fuel IT RAISES THE COST OF EVERYTHING "INFLATION" THAT REQUIRES TRASNSPORT TO GET TO MARKET so if you like paying more for everything from groceries to anything you buy in a retail store support Mikes TANK THE ECONOMY PLAN.


January 31, 2009 12:43 AM

The problem with European Diesels is they are amongst the dirtiest vehicles on the road. The ones you refer to don't have the new bluetec technology that has just hit the market in the higher priced vehicles. So far the Jetta TDI is the only model that gets both the high gas mileage and meets the California emissions standards without a bluetec type system. The other problem with diesels that is holding back their adoption in the U.S. (among both foreign and domestic manufacturers) is their added cost versus a gasoline engine. Some estimates I have read say there would be a three to four thousand dollar premium added to the price of each vehicle for the diesel option. This sounds like a lot but if you consider a diesel pickup available today it is in the ballpark. Then there is the problem of the perceptions people hold onto of the early 80s American diesels. I wish diesels had a better chance in the U.S. but the government is too clueless to see the benefits of diesel and won't create the cost advantage for diesel the way the European countries do.
I agree with this article, the only way to consistently change consumer auto buying habbits in the United States is through a tax to artificially elevate fuel prices. However, the a real problem I have with this scheme is what happens to those dollars. Politicians are notorious for being wasteful and this just puts more money in their accounts to waste away. If all these funds were earmarked for a singular good purpose, such as paying down our national debt, I think the tax could be accepeted by the public. Unfortunately, politicians are afraid to go out on a limb to support such a substantial tax. Personally, I would be suprised to see it ever happen.

James Thurber

January 31, 2009 12:25 PM

Welcome to planet earth, boys. I always said you Americans will catch on eventually. Your cowardly, self serving politicians have yet to stand up and speak the harsh truth to their constituents. within this whole crisis, not one politico that I have seen, has even mentioned the possibility of a national gasoline tax in the media. Quite frankly, as long as you continue to supply cheap drugs, (gas), to your citizens, they will continue with their foolish buying decisions. Who wouldn't? Until someone in the federal government is willing to stand up and be counted, nothing will change. The majority of the planet is already there. Get on the boat, guys!

Dustin Smith

February 2, 2009 6:20 AM

The Kia Borrego is not a crossover. It is built on a truck based platform.


February 2, 2009 1:22 PM

We need gas at 4-5$/gallon. It's amazing how people "need" a vehicle that seats 7 for a family of 3. The real problem in our society is that wants have became needs.

The more I travel the world, the more I like the smaller, efficient offerings provided overseas.


September 22, 2009 3:40 PM

The Blue Tec System is nice but what a pain the new Dodge trucks has it and the system in ineffective and at most a $ buster for the deals and anyone that doesn't want there truck in the truck in for service every 3 weeks..

October 31, 2009 3:46 AM

Diesel fuel has higher energy content than gasoline

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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